CenturyLink to Buy Level 3 Communications for Roughly $34 Billion In Stock and Debt

centurylinkMajor Telecom CenturyLink has just agreed to by Level 3 Communications in a stock-and-cash deal. On Monday, CenturyLink said the acquisition of this internet-service-provider would improve their resources by 200,000 route miles of fiber and would increase its number of on-net buildings to nearly 75,000; for a debt-included $34 billion.

According to CenturyLink Chief Executive Officer and President Glen Post, “The digital economy relies on broadband connectivity, and together with Level 3 we will have one of the most robust fiber network and high-speed data services companies in the world. This transaction furthers our commitment to providing our customers with the network to improve their lives and strengthen their businesses. It is this focus on providing fiber connectivity that will continue to distinguish CenturyLink from our competitors.”

The transaction also appears to be an excellent deal for shareholders too. He goes on to say, “CenturyLink shareholders will benefit from the significant synergies and financial flexibility provided by the combined company’s revenue growth and strong cash flow. For employees, this combination will bring together two highly customer-focused organizations and provide employees growth and advancement opportunities the companies could not offer separately.”

More specifically, shareholders of Level 3 will each get $26.50 a share in cash, in exchange, for roughly 1.43 shares of CenturyLink stock per Level 3 share they presently own. This equates to a rough price of approximately $66.50 per Level 3 share, which is a 42% premium to where they had traded on before the deal was reported on Thursday.

CenturyLink is one of the biggest phone companies in the United States and has been looking to selling its data center business for some time.

Accordingly, JPMorgan Chase & Co analyst Phil Cusick notes, “The combination makes a lot of sense given the combination of Level 3’s and CTL’s legacy Qwest national wireline business networks.”

Finally, Level 3 President and Chief Executive Officer Jeff Storey explains, “This is a compelling transaction for our customers, shareholders and employees. In addition to the substantial value delivered to shareholders, the combined company will be uniquely positioned to meet the evolving and global needs of enterprise customers.”

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